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- Title
Production externalities: internalization by voting.
- Authors
Crès, Hervé; Tvede, Mich
- Abstract
We study internalization of production externalities in perfectly competitive markets where production plans are decided by majority voting. Since shareholders want firms to maximize dividends of portfolios rather than profits, they are interested in some internalization. Two governances, namely the shareholder governance (one share, one vote) and the stakeholder democracy (one stakeholder, one vote), are compared. We argue that perfect internalization is more likely to be the outcome of the stakeholder democracy than the shareholder governance.
- Subjects
SOCIAL choice; STOCKHOLDERS; EXTERNALITIES; ECONOMIC equilibrium; PLURALITY voting; ECONOMIC competition; PRODUCTION planning
- Publication
Economic Theory, 2013, Vol 53, Issue 2, p403
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-012-0697-z